BlockBeats News, March 8th, Wall Street Journal reporter Nick Timiraos, known as the “Fed Whisperer,” published an article stating that the Federal Reserve has always feared being forced to choose between fighting inflation and protecting employment. Friday’s job report brought this dilemma one step closer. Nick cited Neel Kashkari, President of the Federal Reserve Bank of Minneapolis, who has a vote at this year’s Federal Open Market Committee (FOMC) meeting, recently warning that the current situation may be turning into a “rerun” of the Russia-Ukraine conflict, cautioning the Fed not to repeat the mistake of deeming the 2021 inflation surge as temporary.
Regarding the next steps for the Federal Reserve, Timiraos speculated: “Currently, Fed officials may just wait and see. Fed Chairman Jerome Powell had urged other FOMC members to cut rates three times by the end of last year, but each rate cut sparked increasing internal debate within the Fed’s 12-member rate-setting committee. Officials have made it clear that they are not in a hurry to adjust rates at the meeting later this month, and even if a month of data is concerning, it is unlikely to shake this stance.“
Timiraos believes that if the unemployment rate continues to rise in the coming months, the Fed may resume rate cuts in the middle of this year. However, if inflation data surges again before then, internal resistance will significantly increase. He concluded that a central bank facing both softening employment and reigniting inflation risk has “almost no good choices.”
